Management's Discussion and Analysis reviews our consolidated financial condition as of December 31, 2012 and March 31, 2012, the consolidated results of operations for the three months and nine months ended December 31, 2012 and 2011 and, as appropriate, factors that may affect future financial performance. The discussion should be read in conjunction with the condensed consolidated financial statements and related notes included elsewhere in this Form 10-Q. Unless context requires otherwise, as used in this Management's Discussion and Analysis (i) the "current period" means the three months and nine months ended December 31, 2012, (ii) the "prior period" means the three months and nine months ended December 31, 2011, (iii) an increase or decrease compares the current period to the prior period, and (iv) non-comparative amounts refer to the current period.

FORWARD-LOOKING STATEMENTS

This report contains certain "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (the "Securities Act") and Section 21E of the Exchange Act. Forward-looking statements relate to expectations, beliefs, projections, future plans, strategies, anticipated events, trends and other matters that are not historical facts and may include words such as "anticipate," "believe," "plan," "estimate," "expect," "intend," "will," "should," "may," and other similar expressions. These forward-looking statements reflect our current views about future events and are subject to risks, uncertainties and changes in circumstances that might cause future events, achievements or results to differ materially from those expressed or implied by the forward-looking statements. Readers are directed to discussions of risks and uncertainties that may be found in this report and other documents filed by the Company with the SEC. We specifically disclaim any obligation to update or revise any forward-looking information, whether as a result of new information, future developments or otherwise.

Overview

We are a financial services holding company that, through our subsidiaries, provides brokerage, investment advisory, insurance and related services. We operate in a highly regulated and competitive industry that is influenced by numerous external factors such as economic conditions, marketplace liquidity and volatility, monetary policy, global and national political events, regulatory developments, competition and investor preferences. Our revenues and net earnings may be either enhanced or diminished from period to period by these and other external factors.

OUR BUSINESS

We operate primarily through our subsidiary, ICC, as a broker-dealer and, doing business as ICA, as a registered investment advisor, with a national network of independent financial representatives.

Broker-Dealer Services

We provide broker-dealer services in support of trading and investment by our representatives' customers in securities, including corporate equity and debt securities, U.S. Government securities, municipal securities, mutual funds, limited partnerships and other alternative investments, variable annuities and variable life insurance. We also provide related services such as market information, Internet brokerage, portfolio tracking facilities and records management.

Investment Advisory Services

We provide investment advisory services, including asset allocation and portfolio rebalancing, with our various programs. These services, for the most part, are conducted through our online brokerage platform. Other allocation services are performed directly by fund companies. ICA offers several advisory wrap programs that provide managed advisory accounts for our advisors' clients, as follows:

ICA's suite of A-MAP Program, including A-MAP, A-MAP AT, & A-MAP FT, enables the advisor to assist a client in creating a personalized investment portfolio. The advisor acts as the portfolio manager, with full investment discretion.

Fund Select Advisory Wrap Program- Rep-As-Portfolio Manager Program

Fund Select is an advisory program where the advisor creates and manages a customized portfolio constructed primarily of mutual funds.

F-MAP program utilizes a model portfolio established ICA which creates, manages, rebalances, reallocates, and reports on portfolios that consist of but are not limited to: no-load or load-waived mutual funds, ETF's, and/or variable annuities.

S-MAP Advisory Wrap Program - Separate Account Wrap Program

S-MAP is an advisory program where ICA has entered into agreements with Sub-Advisors who are selected by the representatives to provide advisory services to their clients. The S-MAP portfolios are not managed by ICA; rather they are managed by the Sub-Advisor on a discretionary basis.

Recruitment and Support of Representatives

A key component of our business strategy is to recruit well-established, productive representatives who provide superior service to their clients. Additionally, we assist our representatives in developing and expanding their business by providing a variety of support services and a diversified range of investment products for their clients. We focus on providing substantial added value to our representatives' practices, enabling them to be more productive, particularly in high margin lines such as advisory services and brokerage.

Support provided to assist representatives in pursuing consistent, profitable sales growth takes many forms, including automated trading systems, targeted financial assistance and a network of communication links with investment product companies. Regional and national conventions provide forums for interaction to improve product knowledge, sales and client satisfaction. In addition, we provide our representatives with programs and tools to grow their businesses both through new client acquisition and advancement of existing client relationships. These programs enhance our ability to attract and retain productive representatives.

OUR PROCESS Online Brokerage

Registered representatives have direct market access to submit security transactions for their clients through the use of an online brokerage platform for trade execution serviced by Pershing acting as our clearing firm.

Check and Application

Check and application revenue is obtained through a process where a check and a product application is delivered to us for processing that includes principal review and submission to the variable annuity, mutual fund, direct participation or other investment product company. Investments in technology are facilitating our migration over time from a paper intensive to a more paperless process. This shortens the transaction cycle, reduces errors and creates greater efficiencies.

Bond Brokerage

Our fixed-income brokerage desk uses a network of regional and primary dealers to execute trades across a broad array of fixed income asset classes. The desk also utilizes dealer-only electronic services that allow the desk to offer inventory and to execute trades. Our fixed income traders work with our representatives to develop portfolios for clients.

Asset allocation services are made available through ICA. Our services include the design, selection and rebalancing of investment portfolios in several advisory wrap programs. We also provide tools, services and guidance that enable our representatives to provide these advisory services directly to their clients.

CRITICAL ACCOUNTING POLICIES

In General

Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America ("US GAAP"). The Company believes that of its significant accounting policies and litigation and regulatory matters to the Company's condensed consolidated financial statements contained herein), those dealing with revenue recognition, allowance for doubtful accounts receivable, taxes and accrual of legal expenses involve a particularly high degree of judgment and complexity. Our accounting policies require estimates and assumptions that affect the amounts of assets, liabilities, revenues and expenses reported in the condensed consolidated financial statements. By their nature, estimates involve judgment based upon available information. Actual results or amounts can and do differ from estimates and the differences can have a material effect on the condensed consolidated financial statements. Therefore, understanding these policies is important to understanding the reported results of operations and the financial position of the Company.

Off Balance Sheet Risk

We execute securities transactions on behalf of our customers on a fully-disclosed basis. If either the customer or a counter-party fails to perform, we, by agreement with our clearing broker, may be required to discharge the obligations of the non-performing party. In such circumstances, we may sustain a loss if the market value of the security is different from the contract value of the transaction. We seek to control off-balance sheet risk by monitoring the market value of securities held or given as collateral in compliance with regulatory and internal guidelines. Pursuant to such guidelines, our clearing company requires that we reduce positions when necessary. We also complete credit evaluations where there is thought to be credit risk.

Reserves

We record reserves related to legal proceedings in "accrued expenses" in the condensed consolidated balance sheet. The determination of these reserve amounts requires significant judgment on the part of management. Management considers many factors including, but not limited to: the amount of the claim; the amount of the loss in the client's account; the basis and validity of the claim; the possibility of wrongdoing on the part of an employee or representative of the Company; previous results in similar cases; and legal precedents. Each legal proceeding is reviewed with counsel in each accounting period and the reserve is adjusted as deemed appropriate by management. Any change in the reserve amount is recorded in the condensed consolidated financial statements and is recognized as a charge/credit to earnings in that period. The assumptions made by management in determining the estimates of reserves may be incorrect and the actual costs upon settlement of a legal proceeding may be greater or less than the reserved amount. See "Note 6, Litigation and Regulatory Matters".

KEY INDICATORS OF FINANCIAL PERFORMANCE FOR MANAGEMENT

Management periodically reviews and analyzes our financial performance across a number of measurable factors considered to be particularly useful in understanding and managing our business. Key metrics in this process include productivity and practice diversification of representatives, top line commission and advisory services revenues, operating expenses, legal costs, taxes, earnings per share and adjusted EBITDA.

Management believes that improving the overall quality of our independent representatives is a key to achieving growth in revenues and earnings. We believe that upgrading the business practices of our representatives not only grows revenue, but assists in limiting the cost of overhead functions and representative noncompliance. We strive to continually improve the overall quality of our force of representatives by:

· assisting representatives to improve their skills and practices,

· recruiting productive and profitable representatives, and

· terminating low quality representatives.

A key metric that we use to assess the average quality of our producing (non-staff) representatives is per capita rep-generated revenue based on a rolling 12-month period. Data for the 12-months ended December 31, 2012 and 2011 are presented below:

The consistency in the per capita rep-generated revenue is a direct result of recent recruitment of higher-producing representatives, and a focused practice management program offsetting subdued commission activity.

Earnings before interest, taxes, depreciation and amortization ("EBITDA"), as adjusted by eliminating other non-cash expense, gains or losses on sales of assets, and various non-recurring items ("adjusted EBITDA"), is a key metric we use in evaluating our financial performance. Adjusted EBITDA eliminates items that we believe

are not part of our core operations, are non-recurring items of revenue or expense, or do not involve a cash outlay, such as stock-related compensation and professional fees incurred in connection with the Company's registration statement on Form S-3 that closed on August 2, 2011 and related matters. We consider adjusted EBITDA important in monitoring and evaluating our financial performance on a consistent basis across multiple time periods. We also use adjusted EBITDA as an important measure, among others, to analyze and evaluate financial and strategic planning decisions.

Adjusted EBITDA is considered a non-US GAAP financial measure as defined by Regulation G promulgated by the SEC under the Securities Act. Adjusted EBITDA should be considered in conjunction with, rather than as a substitute for, important US GAAP financial measures including pre-tax income, net income and cash flows from operating activities. Items excluded from adjusted EBITDA are significant and necessary components to the operations of our business; therefore, adjusted EBITDA should only be used as a supplemental measure of our operating performance.

Third quarter Adjusted EBITDA, was $0.40 million, an increase of 67.1% from a

$0.24 million Adjusted EBITDA before interest, taxes, depreciation, amortization, non-recurring professional fees, and non-cash compensation in the comparative quarter. This increase is primarily due to the reduced operating income in the current period, as well as reduced non-recurring professional fees.

REVENUE

Revenues increased by $1.73 million or by 9.1 % primarily due to an increase in top line revenue from both commissions and advisory fees, coupled with growth in other fee income.

Revenues from commissions increased by 7.7% or by $1.11 million primarily as a result of commissions earned from brokerage transactions, specifically in listed securities. The increase in brokerage transactions can be reflected from an improved equity market and overall investor sentiment about the stock market.

Our advisor managed program continues to contribute the majority of advisory fee revenue; however, revenues decreased in the A-MAP program. This decrease, along with a decrease in our F- MAP program revenues, was offset by an increase in revenues and assets under management in our A-MAP FT program, another advisor managed program which includes a flat fee structure. These changes resulted largely from a transition of assets to a program more suited for our representatives' client needs.

Other fee income increased primarily as a result of licensing and annual administrative fees. Also there was an increase from technology fees earned from our proprietary technology platform launched in March, 2012.

The decrease in other revenue, which consists of net marketing revenues and interest income, resulted primarily from a decrease in marketing allowances for events.

EXPENSES

Total expenses increased by $1.44 million, or 7.5 %, principally as a result of an increase in commissions and advisory fees compensated to our independent representatives and from an increase in regulatory, legal and professional costs. Offsetting these increases was a decrease in compensation and benefits.

Commissions and advisory fees paid to our representatives represent a percentage of revenue of our broker-dealer; accordingly, the ratio of commissions and advisor fees payout as a percentage of top line revenue in the current period was consistent with that of the prior period; however, because top line revenue increased there was a corresponding increase in commission payouts to our representatives.

The increase in regulatory, legal and professional expenses was driven principally by an increase in legal settlements, and legal fees incurred to resolve a legal dispute with our Landlord, specific to our tenancy at 230 Broadway Lynnfield, MA. Offsetting this increase was a decrease in non-recurring professional fees related to our registration statement on Form S-3 and related matters all of which were completed in the prior period.

We will continue to incur legal fees and settlement costs as we operate in a litigious, regulated industry. In

addition, from time to time regulatory agencies and self-regulatory organizations institute investigations into industry or firm practices, that also may result in the imposition of financial or other sanctions. We invest significant resources to mitigate litigation and regulatory exposure by promoting sound operational procedures and obtaining comprehensive insurance coverage.

The decrease in compensation and benefits is attributable to the cost management initiatives the Company implemented in January 2012, including salary reductions with a reduction in force, offset by one-time separation costs associated with former employees. Also, the final payment was made in August 2012 to our former Chairman satisfying the terms of a one-year post-retirement consulting agreement, whereas in the prior period quarter his consulting fees totaled $0.11 million.

Costs for brokerage, clearing, and exchange fees declined in direct proportion to reduced trading volumes, as well as savings from the termination of a quarterly reporting service contract.

Costs associated with occupancy and equipment decreased from the expiration of operating leases for locations in Miami and Topsfield, MA in the prior period. Other administrative expenses increased as a result of moving expenses incurred to relocate to our new headquarters, also in Lynnfield, MA and the related disposal of leasehold improvements.

The other expense categories had minimal changes in comparing the current period to the prior period.

We had an income tax provision of $0.15 million for the three months ended December 31, 2012 as compared to $0.44 million income tax benefit for the prior period. The income tax rates for the 2012 and 2011 periods do not bear a customary relationship to effective tax rates primarily as a result of the increase in the permanent differences created by various accruals for each of the periods presented, particularly regulatory assessments, costs that were associated with our registration statement filing, and non-deductible executive compensation.

OPERATING AND NET INCOME

Results of operations were positively impacted by both the growth in top line revenues and reduced operating costs. Specifically, we managed our compensation costs as the Company reduced its operating expenses to realign with our profit margins. The Company reported $0.28 million in operating income as compared to $0.01 million of operating loss for the prior period. The Company's net income was $0.13 million, or $0.02 per basic and diluted net income per share, compared to net income of $0.43 million, or $0.07 basic and $0.06 diluted net loss per share, for the prior period.

The Company's net profit of $0.13 million was principally the result of decreased fixed, variable and discretionary operating costs. The Company implemented specific expense reductions during the fourth quarter of last year to mitigate subdued trading activity while applying resources to bolster our recruiting and technology initiatives, all the while addressing on growing compliance requirements.

See information, above, regarding the relevance, calculation and use of adjusted EBITDA set forth in the comparison of the three month periods ended December 31, 2012 and 2011.

REVENUE

Revenues increased by $1.24 million or by a modest 2.1% primarily due to an increase in top line revenues and from other fee income. The Company has seen the securities market rebound in the current period as reflected in the three months ended analysis. In addition, the Company was actively involved in retaining and recruiting its representatives as their average revenue production increased in comparing the current period to the prior period.

Explanations for changes in advisory fees and other fee income are consistent with that of the three months ended analysis.

The decrease in other revenue, which consists of net marketing revenues and interest income, resulted primarily from a decrease in net marketing allowances for annual events. Lastly, we attribute reduced interest income to the current low interest rate environment.

Total expenses decreased by $2.14 million, or 3.4 %, principally as a result of compensation costs and related benefits provided to a reduced headcount, as discussed in the three months ended analysis. This decrease was offset by increases in non-recurring legal and professional fees, greater commissions and advisory fees paid to our representatives in sync with revenue growth, and expanded offerings in our internally developed CapitalCONNECT technology platform and related practice management programs.

Commissions and advisory fees paid to our representatives increased in proportion with revenue growth in Commissions and Advisory fees. The payout ratio also increased when comparing reporting results of the prior nine month period which in turn negatively impacted our profit margin. The increased payout ratio can be attributed to forgivable loan amortization and a reduction in our net retention on platform fees.

The increase in regulatory, legal and professional, the decrease in brokerage, clearing and exchange fees as well as in occupancy and equipment, were consistent with details explained in the three months ended analysis.

Marketing and promotion expenses declined as the Company focused efforts on direct mail campaigns and reduced its branding and advertising spend in various financial services publications.

Other administrative expenses declined primarily from reduced directors and officers insurance policy premiums, which increased in the prior period in conjunction with the registration statement on Form S-3, and in bad debt expense as we wrote off $0.10 million in loans to representatives in the prior period versus $0.01 million in the current period. Offsetting these decreases were increases in other administrative expenses resulting from moving expenses incurred to relocate to our new headquarters, also in Lynnfield, MA and the related disposal of leasehold improvements.

We had an income tax provision of $0.49 million for the nine months ended December 31, 2012 as compared to $0.51 million income tax benefit for the prior period.

OPERATING AND NET INCOME

The Company reported $1.16 million in operating income as compared to $2.22 million of operating loss for the prior period. The Company's net income was $0.68 million, or $0.10 per basic and diluted net income per share, compared to net loss of $1.70 million, or $0.26 basic and diluted net loss per share, for the prior period.

The Company had reduced expenses in the majority of its expense categories and at the same time representative producing revenues increased. Thus, the Company had achieved operating income of $1.16 million versus a $2.22 million operating loss in the prior period, a 152% turnaround. The Company will continue to focus on organic and recruited growth in productivity through continued integration of technology and practice management programs.

Liquidity and Capital Resources

Our primary source of liquidity remains cash flows from operations, primarily from our broker-dealer and investment advisory business. Decisions on the allocation of capital include projected profitability and available cash flows, risk management and regulatory capital requirements. A key to this approach is ensuring that industry-standard controls are effective to support our operations and those of our representatives while ensuring sufficient liquidity.

As of December 31, 2012, cash and cash equivalents totaled $4.55 million as compared to $4.54 million as of March 31, 2012. Working capital as of December

31, 2012 was $5.85 million as compared to $4.16 million as of March 31, 2012. The ratio of current assets to current liabilities was 1.94 to 1 as of December

31, 2012, as compared to 1.61 to 1 as of March 31, 2012.

Operations provided $1.60 million in cash for the current period, as compared to $1.40 million of operating cash provided in the prior period. When comparing the current period cash flow to the prior period cash flow

from operating activities the significant changes were from net income, from account balances held at our clearing firm, and from deferred income taxes due to the increase in the net operating loss in the prior period.

For our current level of operating activities, we believe that our operations and current capital resources will be sufficient to fund our working capital needs for the next twelve months. The Company may, however, seek additional capital within the next 12 months, should it elect to continue pursuing a strategy that incorporates the use of both forgivable and non-forgivable loans to induce newly-recruited financial advisors to join ICC.

Net cash flows used in investing activities in the current period represent purchases in equipment. Net cash flows used in the prior period also represent purchases in equipment, along with the collection of principal payments on a note receivable, capitalization of software for internal use, and contributions on an executive life insurance policy. Cash flows used in the current period from investing activities were fairly consistent with that of the prior period.

Cash flows for financing activities in the current period increased slightly when compared to the prior period as we paid $1.55 million and $1.40 million in loan payments to finance E&O insurance premiums, respectively, for the periods ended December 31, 2012 and 2011. The Company has a line of credit ("line") with specific financial covenants with its financial institution. This line was renewed and amended, effective April 19, 2012. Although there were no borrowings, the Company achieved the required operating results to meet those covenants as of December 31, 2012.

REGULATORY NET CAPITAL

Cash disbursements can have a material impact on our registered broker dealer's regulatory net capital. ICC is subject to the SEC Uniform Net Capital Rule (Rule 15c3-1) which requires our broker-dealer subsidiary to maintain minimum net capital. As of March 31, 2011 and going forward, ICC computes net capital requirements under the alternative method, which requires firms to maintain minimum net capital, as defined, equal to the greater of $250,000 or 2% of aggregate debit balances. Repayment or prepayment of subordinated debt, if any, and withdrawal of equity from retiring partners or officers is subject to net capital not falling below 5% of aggregate debits or 120% of minimum net capital requirement.

As of December 31, 2012, ICC had net capital of $2.56 million (i.e., an excess of $2.31 million) as compared to net capital of approximately $1.43 million (i.e., an excess of $1.18 million) as of March 31, 2012.

We are currently obligated under a lease agreement covering office space, which expires on March 31, 2015. The lease contains provisions for escalation of minimum lease payments contingent upon increases in real estate taxes and condo association fees. The Company is currently attempting to resolve litigation with the lessor of this space, specific to the tenancy at 230 Broadway Lynnfield, MA, as a result of property damages that are preventing occupancy and use of all leased space.

Due to that litigation, on October 19, 2012 the Company entered into a lease for 14,045 square feet and began occupying that space on December 1, 2012. This lease, which is for a term of sixteen months, expires March 31, 2014.

The total minimum rental due in future periods under these existing agreements as of December 31, 2012 is as follows for the years ended March 31, 2013 $ 132,859 2014 534,602 2015 282,214 2016 24,000 2017 24,000 $ 997,674

Total lease expense for office space approximated $0.06 and $0.08 million for the three months ended and $0.18 and $0.25 million for the nine months ended December 31, 2012 and 2011, respectively.